The Hub Power Company Limited (PSX: HUBC) on Wednesday announced that its wholly owned subsidiary, Narowal Energy Limited (NEL), has signed an Amendment Agreement with the Government of Pakistan and the Central Power Purchasing Agency (CPPA) to revise its tariff structure.
The agreement, executed on February 14, 2025, follows a request from a task force under the Prime Minister’s Office to transition to a ‘Hybrid Take and Pay’ model.
Effective from November 1, 2024, the revised terms include changes to the indexation mechanism for operations and maintenance (O&M), adjustments to the cost of working capital and O&M tariffs, and a shift in the return on equity component to a hybrid take-and-pay system. The insurance premium tariff is now capped at 0.9 percent of the EPC cost.
The government has agreed to withdraw arbitration under the Arbitration Submission Agreements, while CPPA is required to clear outstanding receivables as of October 31, 2024, within 90 days of cabinet approval. Outstanding late payment interest as of the same date will be waived. Furthermore, the arbitration clause in the Power Purchase Agreement (PPA) will be replaced with arbitration under local laws.
Sensible Legal expert is required to participate with Hubco IPP’S contract. He must keep in mind about the nation living below poverty line. Contract should be in favour of nation NOT in favour of others. Bribe may be used by the IPP’s owners to buy negotiators.